Tag: FBR

FBR, Pakistan’s national tax collecting agency, plays a crucial role in the country’s economy. Pakistan Revenue is committed to providing readers with the latest updates and developments regarding FBR activities.

FBR to issue ATL Tax Year 2019 on March 01

KARACHI: Federal Board of Revenue (FBR) will issued Active Taxpayers List (ATL) for tax year 2019 on March 01, 2020 to enable persons filed income tax returns for the tax year availing reduced rates and other benefits.

ATL is published every financial year on the March 01 and is valid up to the last day of February of the next financial year, the FBR said.

For example, Active Taxpayer List for Tax year 2017 was published on March 01, 2018 and will be valid till February 28, 2019.

Similarly, Active Taxpayer List for Tax year 2018 was published on 1st March 2019 and will be valid till February 29, 2020.

The appearance of ATL has become more important following amendment introduced through Finance Act, 2019 under which 100 percent additional tax has been imposed on certain transactions by persons not appearing on the ATL.

The FBR in an official memorandum said that previously the law provided for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.

This tax regime had created a misconception that a non-filer can go scot free by choosing not to file income tax return.

The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.

The measure had not achieved the desired results as the previous regime did not provide for any legal framework to ensure filing of return by such non filers.

In order to remove the aforesaid misconception, the concept and the term of ‘non-filer’ is being abolished from the statute, wherever occurring.

A separate Schedule has introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.

The main attributes of this scheme are as under:-

— Persons whose names are not appearing on the ATL will be subjected to hundred percent increased rate of tax.

— The withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.

— Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return. The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate

— Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.

— The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly. Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.

January 21, 2020
Sales tax rates issued for retailers integrated with FBR

ISLAMABAD: Federal Board of Revenue (FBR) has issued sales tax rate for different categories of retailers, who integrated their sales with online system of the FBR.

The FBR said that the rate of sales tax for items sold by integrated retailers shall be the same as for all other suppliers as provided under the Sales Tax Act, 1990.

Only exception is for locally manufactured textile and leather items, which if sold by integrated retailers are subject to concessionary rate of 14 percent, and if sold by any other supplier are subject to 17 percent standard sales tax.

Category-wise rates for items sold by integrated retailers is as below:

Items falling in Sixth Schedule to the Sales Tax Act, 1990, the sales tax shall be exempted on sale of milk, rice, wheat flour, pulses, fruits & vegetables (except canned and packaged), uncooked meat, poultry, eggs, stationary items, medicines, laptops and personal computers etc

Items falling in Eighth Schedule to the Act, the reduced rate of sales tax rate shall be as provided in the Schedule. The sale of dairy items other than milk, fat-filled milk (tea-whitener), flours other than that of wheat, if sold in retail packing under a brand name, are subject to sales tax rate of 10 percent; and prepared products of meat or meat offal, if sold in retail packing under a brand name, are subject to sales tax rate of 8 percent;

Precious jewellery at 1.5% of value of gold, plus 0.5% of value of diamond, used therein, plus 3% of making charges

Finished fabric, and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather (See S. No. 66 of Table 1 of Eighth Schedule) shall be subject to 14 percent of sales tax.
This will include locally manufactured garments, shoes, bags, made-ups etc of textile, leather and artificial leather.

Mobile phones and satellite phones: Under Ninth Schedule, sales tax is to be paid by the importer and manufacturers only. No sales tax to be charged on subsequent supplies. However, suppliers may pass on the burden of sales tax charged on their purchases in their selling price.

Items not covered above shall be liable to standard sales tax rate at 17 percent on items in Third Schedule except fertilizers, imported textile and leather items, electronic items, watches, sugar, hardware, sanitary ware, kitchenware, toys, furniture, sports goods, surgical instruments, crockery, plastic products, imitation jewellery, etc.

January 21, 2020
FBR clarifies delay in track, trace system implementation

ISLAMABAD: Federal Board of Revenue (FBR) has said that implementation of track and trace system has been stayed by a court. As soon the stay is vacated by the court the process will be implemented, said a statement issued on Monday.

The FBR issued the clarification in response to news reports published on January 20, 2020 about delay in the implementation of FBR’s Track & Trace System to control illicit tobacco trade.

FBR has clarified that a license has been issued to M/s NRTC on October 14, 2019 through a transparent and fair process of bidding which is strictly in accordance with the PPRA Rules, 2004 and Licensing Rules, 2019.

However, the award of license to lowest bidder i.e. M/s NRTC was challenged by some unsuccessful bidders i.e. M/s SICPA Ink in Sindh High Court and M/s Reliance IT Solutions (Pvt) Ltd and M/s NIFT Consortium in Islamabad High Court.

Since, the Honorable Court has granted status quo and the matter is sub-judice before the aforesaid courts, therefore, there is no delay on the part of FBR.

The process of implementation of Track and Trace System will be resumed as and when the stay order is vacated by the Honorable Court.

January 20, 2020
Pension granted total income tax exemption

ISLAMABAD: Pensioners are allowed total exemption from tax on income received as pension.

Officials in Federal Board of Revenue (FBR) on Monday said that pensioners are allowed complete exemption from income tax under Income Tax Ordinance, 2001.

They said that any pension received by a citizen of Pakistan from a former employer will be exempted from income tax, other than where the person continues to work for the employer (or an associate of the employer).

Provided that where the person receives more than one such pension, the exemption applies only to the higher of the pensions received.

The exemption from income tax also available on any pension –

(i) received in respect of services rendered by a member of the Armed Forces of Pakistan or Federal Government or a Provincial Government;

(ii) granted under the relevant rules to the families and dependents of public servants or members of the Armed Forces of Pakistan who die during service.

Any payment in the nature of commutation of pension received from Government or under any pension scheme approved by the FBR for the purpose of this clause is also exempted.

Any income representing any payment received by way of gratuity or commutation of pension by an employee on his retirement or, in the event of his death, by his heirs as does not exceed –

(i) in the case of an employee of the Government, a Local Government, a statutory body or corporation established by any law for the time being in force, the amount receivable in accordance with the rules and conditions of the employee’s services;

(ii) any amount receivable from any gratuity fund approved by the Commissioner in accordance with the rules in Part III of the Sixth Schedule;

(iii) in the case of any other employee, the amount not exceeding three hundred thousand rupees receivable under any scheme applicable to all employees of the employer and approved by the Board for the purposes of this sub-clause; and

(iv) in the case of any employee to whom sub-clause (i), (ii) and (iii) do not apply, fifty per cent of the amount receivable or seventy-five thousand rupees, whichever is the less:

Provided that nothing in this sub-clause shall apply –

(a) to any payment which is not received in Pakistan;

(b) to any payment received from a company by a director of such company who is not a regular employee of such company;

(c) to any payment received by an employee who is not a resident individual; and to any gratuity received by an employee who has already received any gratuity from the same or any other employer.

January 20, 2020
Draft return, wealth statement forms for traders finalized

ISLAMABAD: Federal Board of Revenue (FBR) has finalized simple income tax return and wealth statement for small traders, sources said on Sunday.

The FBR has not issued officially the draft returns and wealth statement forms for traders but sources said that the draft had been finalized and would be issued soon.

The draft income tax return form has been simplified. The form is one-page with 15 entries to be filled.

The traders are required to basic information including name, address, business assets and number of employees and bank account number.

The description in required fields to be filed are included: turnover/receipts; cost of sales; opening stock; purchases; closing stock; other direct expenses; gross profit; overhead expenditure; net profit/taxable income; income from all other sources; tax chargeable; minimum tax; tax payable whichever is higher; tax already paid; net tax payable/refundable.

The wealth statement form has also been simplified with small amount of required information.

Draft income tax return form for traders:

Draft wealth statement form for traders:

January 19, 2020
FBR starts phasing out final tax regime

ISLAMABAD: Federal Board of Revenue (FBR) has started phasing out final tax regime for an equitable taxation system.

Sources in the FBR said on Saturday that in the budget 2019/2020 final tax regime had been withdrawn for various sectors, which were enjoying this regime for the past many years.

The FBR in a report said that income tax by its inherent nature is tax charged and levied on income.

However some persons involved in certain transactions are not required to pay tax on their actual profit.

Instead, the tax collected or deducted on these transactions is treated as final tax liability.

Previously, this regime is available persons to such as commercial importers, commercial suppliers of goods, contractors, persons deriving brokerage or commission income and persons earning income from CNG stations.

The tax collected or deducted from the aforesaid persons are now treated as minimum tax liability except for exporters, persons winning prizes and sellers of petroleum products.

This measure is designed as a first step for gradual phasing out of the final tax regime and transition to income based taxation for all persons.

January 19, 2020
FBR to meet for addressing small traders’ concerns

ISLAMABAD: Federal Board of Revenue (FBR) has decided to launch a series of meetings with representatives of traders associations to address concerns of small traders, sources said on Saturday.

In this regard a combined meeting of traders’ representatives and senior officers of FBR will be held on January 22, at FBR House Islamabad.

In the meeting, the chairperson and other senior officers of FBR will brief the traders about the progress on the agreement with the traders and will take them into confidence.

It is worth mentioning that the FBR and traders associations signed an agreement on October 30, 2019 in which 11-point was agreed by the both sides to bring small traders and shopkeepers into the tax net through introduction of fixed tax and simple income tax return form.

The sources said that representatives of traders and the FBR officers would hold a combined meeting on January 24, 2020 at Regional Office Islamabad/Rawalpindi, January 27, 2020 at Karachi, January 29, 2020 at Multan, January 30, 2020 at Faisalabad and January 31, 2020 at Lahore Regional Office.

The sources said that an important meeting between representatives of Trade Associations and Senior officers of Federal Board of Revenue was held last week at FBR House Islamabad.

The traders’ representatives included Kashif Chaudhry, Naeem Mir and Ajmal Baloch whereas FBR Team was led by Acting Chairperson FBR Nausheen Amjad and included Member IR Policy Dr. Hamid Ateeq Sarwar and DG Retail Hameed Memon.

It was agreed in the meeting that committees established throughout Pakistan will be completed in coming two days.

The meeting had discussed issues arising due to turnover tax and decided the issue would be analyzed afresh in the future meeting with the tyre, mobile, ghee, sugar, pulses etc, cement, fertilizer, electronics, yarn, iron steel, paper, automobile and other sectors.

January 18, 2020

Three new slabs added for taxation on income from property

ISLAMABAD: Three additional slabs have been added to income from property in order to generate more revenue under this head, sources in Federal Board of Revenue (FBR) said on Friday.

They said that in the last budget 2019/2020, effective from July 01, 2019, three additional slabs have been added to income from property in order to generate more revenue.

Prior to the amendment there were five taxable slabs of income from property with the highest slab’s rate being Rs. 200,000/- plus 20 percent of income exceeding Rs2000,000.

After the amendment said slab has been limited from Rs 2000,000/- to 4,000,000/- and thereafter three additional brackets of income between four to six million, six to eight million and exceeding eight million have been added.

The updated table of tax on income from property is as under:

S.No.	Gross amount of rent	Rate of tax
(1)	(2)	(3)
1.	Where the gross amount of rent does not exceed Rs.200,000.	Nil
2.	Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs.600,000.	5 per cent of the gross amount exceeding Rs.200,000.
3.	Where the gross amount of rent exceeds Rs.600,000 but does not exceed Rs.1,000,000.	Rs.20,000 plus 10 per cent of the gross amount exceeding Rs.600,000.
4.	Where the gross amount of rent exceeds Rs.1,000,000 but does not exceed Rs.2,000,000.	Rs.60,000 plus 15 per cent of the gross amount exceeding Rs.1,000,000.
5.	Where the gross amount of rent exceeds Rs.2,000,000 but not exceed Rs. 4000,000	Rs.210,000 plus 20 per cent of the gross amount exceeding Rs.2,000,000”
6.	Where the gross amount of rent exceeds Rs.4,000,000 but does not exceed Rs.6,000,000.	Rs.610,000 plus 25 per cent of the gross amount exceeding Rs.4,000,000.
7.	Where the gross amount of rent exceeds Rs.6,000,000 but does not exceed Rs.8,000,000.	Rs.1,110,000 plus 30 per cent of the gross amount exceeding Rs.6,000,000.
8.	Where the gross amount of rent exceeds Rs.8,000,000.	Rs.1,710,000 plus 35 per cent of the gross amou

(b) The rate of tax to be deducted under section 155, in the case of company shall be 15 percent of the gross amount of rent.

The chargeability of tax on income from property has been explained in Section 155 of Income Tax Ordinance, 2001.

Section 155. Income from property.— (1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.

Explanation.- “gross amount of rent” includes the amount referred to in sub-section (1) or (3) of section 16, if any.

(3) In this section, “prescribed person” means –

(i) the Federal Government;

(ii) a Provincial Government;

(iii) Local Government;

(iv) a company;

(v) a non-profit organization or a charitable institution;

(vi) a diplomatic mission of a foreign state;

(via) a private educational institution, a boutique, a beauty parlour, a hospital, a clinic or a maternity home;

(vib) individuals or association of persons paying gross rent of rupees one and a half million and above in a year; or

(vii) any other person notified by the Board for the purpose of this section.

January 17, 2020

FBR processes refund claims with data errors under FASTER system

KARACHI: Federal Board of Revenue (FBR) on Friday said it processed refund claims with data errors under Fully Automated Sales Tax e-Refund (FASTER) system.

The FBR urged FASTER Refund claimants to file refund claims in sequence i.e. July 2019 and then August 2019 and so on.

“Claims with data errors, rolled back and re-submitted claims relating to July 2019 have been processed,” the FBR said.

Such claims relating to August 2019 are under process which will be followed by September 2019 and onwards claims.

BCA Data is being sorted and Commercial Exporters Claims shall be processed in the coming week, the FBR added.

The FBR recently introduced electronic refund processing system to facilitate taxpayers. However, due to glitches in the form submission created difficulties for taxpayers in obtaining refunds.

The FBR issued a guideline for claiming refund under FASTER System.

01. Annex-H is a stock statement of input goods / services which shows flow of inputs in terms of quantity, value and sales tax involved in opening / closing balances, purchases and consumption in exports and local sales.

02. Quantities / values of finished products (exports and local) and output tax on local sales should not be mentioned in Annex-H.

03 Use Annex H to upload for the month transactions i-e purchase, import and Consumption only, Opening and Closing are derived /calculated automatically.

Same is applicable for Excel file uploading otherwise objection of duplicate value will arise.

04. The brought forward and carry forward tax amount in the return should match with opening balance and closing balance tax amount in the Annex-H.

05. The value of purchases and input tax paid thereon in the return should match with the corresponding figures in columns “purchased / imported during the month” in Annex-H.

Properly filled Annex-H without objections and anomalies of data will ensure processing in 72 Hours, the FBR said.

January 17, 2020
FBR issues list of 3,184 registered NPOs, NGOs

ISLAMABAD: Federal Board of Revenue (FBR) issued a list of 3,184 Non-Profit Organizations (NPOs) and Non-Governmental Organization (NGOs) that are registered with the tax authorities.

The income tax regime has been revised for NPOs and charitable organizations and tax credit shall be available to such organizations on filing of income tax returns.

The FBR conducted fresh scrutiny of NPOs and NGOs and then registered the organizations.

Section 100C of Income Tax Ordinance, 2001 deals with tax credit for NPOs, which is as follow:

Section 100C: Tax credit for certain persons.

Sub-Section (1): The income of Non-profit organizations, trusts or welfare institutions, as mentioned in sub-section (2) shall be allowed a tax credit equal to one hundred per cent of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, subject to the following conditions, namely:-

(a) return has been filed;

(b) tax required to be deducted or collected has been deducted or collected and paid;

(c) withholding tax statements for the immediately preceding tax year have been filed;

(d) the administrative and management expenditure does not exceed 15 percent of the total receipts:

“Provided that clause (d) shall not apply to a non-profit organization, if—

(a) charitable and welfare activities of the non-profit organization have commenced for the first time within last three years; and

(b) total receipts of the non-profit organization during the tax year are less than one hundred million Rupees”;

(e) approval of Commissioner has been obtained as per the requirement of clause (36) of section 2:

Provided that this clause shall take effect from the first day of July, 2020; and

(f) none of the assets of trusts or welfare institutions confers, or may confer, a private benefit to the donors or family, children or author of the trust or his descendents or the maker of the institution or to any other person:

Provided that where such private benefit is conferred, the amount of such benefit shall be added to the income of the donor:

Sub-Section (1A): Notwithstanding anything contained in sub-section (1), surplus funds of non-profit organization shall be taxed at a rate of ten percent.

(1B) For the purpose of sub-section (1A), surplus funds mean funds or monies:

(a) not spent on charitable and welfare activities during the tax year;

(b) received during the tax year as donations, voluntary contributions, subscriptions and other incomes;

(c) which are more than twenty-five percent of the total receipts of the non-profit organization received during the tax year; an

(d) are not part of restricted funds.

Explanation.- For the purpose of this sub-section, “restricted funds” mean any fund received by the organization but could not be spent and treated as revenue during the year due to any obligation placed by the donor.

Sub-Section (2): Persons and incomes eligible for tax credit under this section include-

(a) any income of a trust or welfare institution or non-profit organization from donations, voluntary contributions, subscriptions, house property, investments in the securities of the Federal Government and so much of the income chargeable under the head “income from business” as is expended in Pakistan for the purposes of carrying out welfare activities:

Provided that in the case of income under the head “income from business”, the exemption in respect of income under the said head shall not exceed an amount which bears to the income, under the said head, the same proportion as the said amount bears to the aggregate of the incomes from the aforesaid sources of income.

(b) a trust administered under a scheme approved by the Federal Government in this behalf and established in Pakistan exclusively for the purposes of carrying out such activities as are for the benefit and welfare of—

(i) ex-servicemen and serving personnel, including civilian employees of the Armed Forces, and their dependents; or

(ii) ex-employees and serving personnel of the Federal Government or a Provincial Government and their dependents, where the said trust is administered by a

committee nominated by the Federal Government or, as the case may be, a Provincial Government;

(d) income of a university or other educational institution being run by a non-profit organization existing solely for educational purposes and not for purposes of profit;

(e) any income which is derived from investments in securities of the Federal Government, profit on debt from scheduled banks and microfinance banks, grant received from Federal Government or Provincial Government or District Governments, foreign grants and house property held under trust or other legal obligations wholly, or in part only, for religious or charitable purposes and is actually applied or finally set apart for application thereto:

Provided that nothing in this clause shall apply to so much of the income as is not expended within Pakistan:

Provided further that if any sum out of the amount so set apart is expended outside Pakistan, it shall be included in the total income of the tax year in which it is so expended or of the year in which it was set apart, whichever is the greater, and the provisions of section 122 shall not apply to any assessment made or to be made in pursuance of this proviso.

Explanation.— Notwithstanding anything contained in the Mussalman Wakf Validating Act, 1913 (VI of 1913), or any other law for the time being in force or in the instrument relating to the trust or the institution, if any amount is set apart, expended or disbursed for the maintenance and support wholly or partially of the family, children or descendents of the author of the trust or the donor or, the maker of the institution or for his own maintenance and support during his life time or payment to himself or his family, children, relations or descendents or for the payment of his or their debts out of the income from house property dedicated, or if any expenditure is made other than for charitable purposes, in each case such expenditure, provision, setting apart, payment or disbursement shall not be deemed, for the purposes of this clause, to be for religious or charitable purposes; or

(f) any income of a religious or charitable institution derived from voluntary contributions applicable solely to religious or charitable purposes of the institution:

Provided that nothing contained in this clause shall apply to the income of a private religious trust which does not ensure for the benefit of the public.”

January 17, 2020